How does ATM skimming work?

In 2006, a team of Massachusetts researchers built a simple device to read the data on RFID-equipped credit cards. RFID cards allow for a "tap and go" style of payment because the information is transmitted wirelessly. The worry, of course, is that data transmitted wirelessly can be intercepted or easily accessed from an outside source. The Massachusetts researchers were able to skim a name, card number and expiration date off an RFID credit card with their device, which they built with about $150 worth of readily available electronics [source: Schwartz].

Theoretically, a skimmer could build such a device and walk through a crowd, lifting information from nearby credit cards with RFID tags. But here's the good news -- the cards tested in Massachusetts were old, first-generation models with little or no security protection. Newer cards use encryption or transmit "dummy numbers" that are only good for a single transaction [source: Schwartz]. To date, there are no reports of RFID tag skimming. Of course, as RFIDs become more and more prevalent in credit cards, who knows what inventive skimming methods hackers will develop. Read on for more information on how ATM machines and how to protect yourself from identity theft.